The 2014 Real Estate Outlook: Bull Versus Bear

By Jason Katz, Vice President of Mortgage Lending for Guaranteed Rate Mortgage

2013 was a year of contrasts for the San Diego real estate market. During the first half of the year, an unusually low supply of homes, coupled with low rates, spurred bidding wars and pushed home prices up sharply. The second half of the year saw a sudden spike in interest rates and an increase of inventory, so the frenzy cooled off.

What does that mean for 2014? There are contradictory points of view, both with valid points. Depending on your perspective, this might be a good time to buy, sell, or stay out of the real estate market for a while.

Bull Perspective:

From the Bull point of view, low home inventories support rising prices. For 2014, projections estimate a gradual stabilizing of inventory. Rising prices in 2013 have allowed more homeowners to return to positive equity and list their homes.  Builders are also starting new construction in the area. In fact, building permits approved in San Diego County were up 43% through July 2013 from 2012.

There are more buyers in the market for new homes. New rules with FHA’s Back to Work or extenuating circumstances guidelines have opened the door for former homeowners to buy again after only one year of having sold their previous home in a foreclosure or short sale. This is down from three years for a short sale or foreclosure and two years for a bankruptcy.

Another reason to be bullish: Zillow’s Market Health Index, calculated on a scale from 0 to 10, is a measure designed to illustrate the current health of a region’s housing market relative to similar markets nationwide. San Diego ranked fourth in the nation with a score of 8.4.

Mortgage delinquencies have dropped and the worst of the distressed-housing problem appears to be in the rear view mirror.  The economy is trending up and unemployment is trending down, although at a slow pace.

Bear Perspective:

Not everyone feels the market is on an upswing. Bears believe that the housing recovery is a mirage sustained by the Federal Reserve’s stimulus, which has done little more than inflate home prices, stocks and other assets.

Record low interest rates unleashed demand from borrowers and investors seeking anything with a decent return. Now the big investors are no longer in the market after cherry picking the undervalued real estate. Prices in 2013 outpaced income growth furthering declines in home affordability. If the US economy begins to grow at a faster pace and incomes begin to rise, the affordability index will slide further from rising mortgage rates. The Mortgage Banker Association is also predicting a rise in interest rates. They predict a 30-year fixed will increase from 4.7% in the first quarter of 2014 to 5.3% by the end of 2014.

Whether you are a Bull or a Bear, this year will definitely see changes in the housing market and distribution of loans. FHA has reduced the size of the loan it will insure from $697,250 to $546,250 in San Diego County, and Mortgage Insurance has been extended as a requirement for 30 years or the life of the loan for limited down payment FHA options.

For more information regarding real estate and mortgage news, follow me online at myguaranteedrate.com. With over fifteen years in the mortgage industry and a track record of 100% on time closings, I look forward to helping you find the mortgage that’s right for you. Email me at jason.katz@guaranteedrate.com or call me at 858.245.5289.  NMLS ID: 312660

The views, facts, and opinions expressed in this article are solely those of the original author and other contributors and do not express the opinions of Guaranteed Rate, Inc.

Related posts:

  1. Real estate private placement and non-traded REIT fraud: a protection guide for real estate investors
  2. Local real estate industry experts gather to present home buying workshop
  3. TIC investment fraud: how to protect against dishonest 1031 real estate deals
  4. Willis Allen real estate agents Rande Turner and Jill Wheeler list San Diego’s first Leed Home for sale
  5. Sampson California Realty welcomes real estate agent Stacy Boodman

Short URL: http://www.delmartimes.net/?p=63820

Posted by Social Media Staff on Jan 27, 2014. Filed under Columns, Jason Katz, Sponsored Columns. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

Leave a Reply

Archives

Facebook

Bottom Buttons 1

Bottom Buttons 2

Bottom Buttons 3

Bottom Buttons 4

Bottom Buttons 5

Bottom Buttons 6

LA JOLLA NEWS

RSS LA JOLLA NEWS

  • 10 Reasons to Generate Your Own Power
    By Martin Learn, Home Energy Systems As we take one step closer towards August, we all prepare for the blazing sun, the heat it brings, and in turn, the cranked-up AC. But instead of seeing the sun as an enemy, something to be protected against, there is a way to embrace that solar power and […]
  • La Jolla Community Calendar July 24-31
    La Jolla Concerts by the Sea continue 2-4 p.m. Sunday, July 27 with the Bill Magee Blues Band, performing electric New York and Chicago-style blues (preview at BillMageeBlues.com). Scripps Park at La Jolla Cove. Free. (858) 454-1600. LJConcertsByTheSea.org […]
  • FRONTLINE CANCER: The value of Comprehensive Cancer Centers
    It’s estimated that approximately 14 million Americans alive today have had cancer. Some are cancer-free; some are still fighting it. This year, they will be joined by another 1.6 million persons who will receive that fearful diagnosis. The grim news, of course, is that the ranks of cancer patients are also trimmed each year by death: More than 585,000 annua […]

RANCHO SANTA FE NEWS

RANCHO SANTA FE NEWS

RSS RANCHO SANTA FE NEWS